How to Implement Value-Add Strategies at Apartment Buildings Without Making Them Too Expensive

Careful repositioning decisions can keep apartments affordable for middle-income renters.

Turns out value-add investment strategies, in which developers renovate older apartment buildings, can make apartments too expensive for many lower-income renters, according to industry experts.

“As an industry, we are taking too many class-C apartments and trying to make them class-As,” says Daryl Carter, founder and CEO of Avanath Capital Management, an investment firm based in Irvine, Calif., that focuses on renovating older apartments.

Firms like Avanath take a different approach. They try to renovate apartments in ways that modestly increase rents and also repair deferred maintenance problems like leaky roofs and pealed paint. That can help keep the buildings operating while keeping the units affordable for middle-income renters for decades to come.

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